Opposing HMRC penalties on grounds of ‘reasonable excuse’

Recent reports have shed light on some of the most unusual cases where self-assessment taxpayers have managed to successfully appeal late filing and late payment penalties issued by HM Revenue & Customs (HMRC).

In one instance, a taxpayer named Magdalena Trzcińska successfully appealed a late filing penalty thanks to a well looked-after ‘signed for’ Post Office slip, according to reports.

Ms Trzcińska had submitted her 2011/12 self-assessment return to HMRC on 29 May – but the tax return had not been received by the Revenue.

Despite this, a Tax Tribunal took into account the fact that the return had indeed been sent to HMRC on time – as evidenced by a ‘signed for’ slip stamped by the Post Office.

The envelope could not be located via the Parcelforce Track and Trace system, however, a Judge noted that the audit trail would have been lacking anyway unless Ms Trzcińska had personally handed the envelope across the counter to a Post Office member of staff.

The Tribunal’s decision came despite the fact that separate evidence suggested Ms Trzcińska had later tried to rectify the matter by submitting a second self-assessment return to HMRC five months after the deadline.

This separate evidence was presented to the Tribunal, but did not disturb its finding that the ‘signed for’ slip proved a paper return had been submitted 13 months previously.

In another unusual case, a taxpayer named Theodore Laverty who had moved abroad managed to successfully appeal penalties adding up to £1,700 for failure to submit self-assessment returns on time.

Mr Laverty had moved to Vietnam and his UK residence had been let out to a tenant during his time overseas. He argued that he had not received correspondence from HMRC in relation to his self-assessment return as the area of Vietnam he was living in had “no residential post” system in place.

At a Tax Tribunal, HMRC said that documents were “served within the ordinary course of postal delivery in accordance with the Interpretation Act 1978.”

However, in this case, the Tribunal doubted whether the Interpretation Act could fairly apply in Vietnam.

Furthermore, it considered that Mr Laverty had taken ‘adequate steps’ to take care of his tax affairs during his absence – primarily because he had appointed a UK-based accountant while he was abroad and because he had completed a 64-8 form.

It also took into account the fact that, after clarifying the position regarding his tax returns with HMRC, he had submitted his outstanding returns within six weeks.

The Tribunal found that, although the ‘reasonable excuse’ effectively came to an end in January 2013 – when Mr Laverty returned to the UK – the delay in submission “was rectified within a reasonable period on 7 March 2013.”